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Hopefully someone on here can help settle an ongoing debate I've been having with a colleague. We've been discussing different techniques which could be used to entice players of our games to continue playing. At some point the idea of "Awarding" the top X players every month was suggested. A simple example would be "The top 10 players each receive $100".

To me this idea seems like it fits the definition of gambling play games of chance for money; bet. which would be illegal in my jurisdiction (unless you were a sanctioned body).

My colleague however insists that it is not gambling because the game requires a level of skill and that the payout would be based on the level of accomplishment that player had achieved. They go on to compare the scenario to when prize money is awarded at e-sports competitions.

I can understand how my colleague could come to this conclusion, but to me it still seems at best a grey area where the law would be concerned (if not full blown black area)

Obviously neither of us posses any real experience dealing with legal issues such as these, so we have pretty much come to a stale mate.

Can anyone here help shed some light onto this topic. Would the situation I have described be considered gambling?

  • Where is your location? – Putvi May 16 '19 at 17:00
  • @Putvi United States, Missouri specifically – commanderZiltoid May 16 '19 at 17:40
  • Is this an MMO? How are you generating revenue? – hszmv May 16 '19 at 21:14
  • @hszmv The game we have in mind that this would be implemented for would not be an MMO, but a competitive FPS similar to counter-strike where each player has the same chance of winning a round as every other player and skill is the only determining factor as to who wins the match. Revenue would be generated via a monthly subscription fee to our company for a certain amount (say $1.99 for example). We would then take a percentage of that Revenue and award prize money to the top players (top 10, 100, 1000 not sure where the cutoff would be at this point exactly) – commanderZiltoid May 17 '19 at 5:31
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Betting would be making a wager, as in saying if this team wins, you get this in a game of chance.

The video game is still a game of chance, but giving a reward is not a bet. MO defines gambling as:

(4) "Gambling", a person engages in "gambling" when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome. Gambling does not include bona fide business transactions valid under the law of contracts, including but not limited to contracts for the purchase or sale at a future date of securities or commodities, and agreements to compensate for loss caused by the happening of chance, including but not limited to contracts of indemnity or guaranty and life, health or accident insurance; nor does gambling include playing an amusement device that confers only an immediate right of replay not exchangeable for something of value. Gambling does not include any licensed activity, or persons participating in such games which are covered by sections 313.800 to 313.840; https://law.justia.com/codes/missouri/2011/titlexxxviii/chapter572/section572010

You are free to give a reward to the top player since you are not betting on an outcome, but giving a prize.

That applies to your state only however, if you have players from multiple states and countries you would have to comply with the laws in those areas too.

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  • If the game has a signiciant chance element, such as loot boxes, that could complicate the situation, however. – Acccumulation May 16 '19 at 19:20
  • It would not complicate it because the prize is not being given for something of chance. Its just arbitrarily given to the top player. – Putvi May 16 '19 at 19:22
  • If the game is a game of chance, then the prize is being given for something of chance. – Acccumulation May 16 '19 at 19:25
  • No, because you aren't awarding it based on the chance part. If you and I bet money on who would win and its a game of chance that would be true. The OP isn't betting on one player or the other though. – Putvi May 16 '19 at 19:28
  • If the prize is based on winning, and winning is based on chance, then by transitivity, the prize is based on chance. Do you think craps isn't gambling? – Acccumulation May 16 '19 at 19:31
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Your colleague is right (probably)

Competitions based on skill that offer prizes to the competitors are not gambling - the $40,000AUD prize for the winner of the Stawell Gift, the $1.86 million USD to the winner of the Kentucky Derby, the £38 million GBP for winning the Premier League, and the various prizes for Fortnite Leagues are not gambling. Bets made by 3rd parties on the outcome of these (which usually total a lot more than the prizes) are gambling.

Whether a game is one of skill or chance is a matter of degree. Also, whether a payment is a prize for competing or a wage for working depends on if it is earned through ‘winning’ or ‘grinding’

Notwithstanding, while prizes are more widely legal than gambling, they are usually subject to their only legal requirements.

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Would the situation I have described be considered gambling?

Under U.S. law, the decisive factor is whether a prize --which you quantify at $100-- exceeds the fee(s) a user has to pay you in order to play the game.

For the legal definition of gambling as well as U.S. case law distinguishing between gambling and entertainment, see this related answer.

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    He is in MO, and the MO law says nothing about the fees exceeding the prize. – Putvi May 16 '19 at 18:19
  • @Putvi So what? Other states have similar definitions of gambling, and yet their courts apply the criterion of "prize [being] worth less than the amount he has played". Particular to Missouri, the three elements of gambling listed in Veterans of Foreign Wars v. Missouri Gaming Commission, 260 S.W.3d 388, 391 (2008) strikingly resemble the ones listed in Com. v. Irwin, 535 Pa. 524, 527 (1993). – Iñaki Viggers May 16 '19 at 20:11
  • The MO case there is about having illegal gambling machines, not what is being discussed here. – Putvi May 16 '19 at 20:16
  • @Putvi You are missing the point. A Missouri court could decide the OP's controversy by adopting the Pennsylvania court's rationale in Com. v. Irwin to discern whether or not the $100 reward amounts to gambling. After all, these jurisdictions' prima facie elements of gambling are consistent. – Iñaki Viggers May 16 '19 at 20:23
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    To cite the case, it has to be directly about the issue at hand. Like you would need to find a case about awards to the top players of something. – Putvi May 16 '19 at 20:26

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